Nigeria’s external reserves have risen to $46.7 billion, the highest level in almost seven years, but unlike previous episodes of reserve accumulation, the Central Bank of Nigeria (CBN) says this increase was not driven by external borrowing.
Rather, it is the result of stronger market fundamentals, greater policy credibility and sustained reforms.
CBN Governor Olayemi Cardoso stated this on Friday at the Chartered Institute of Bankers of Nigeria (CIBN) Annual Bankers Dinner where he delivered a wide-ranging speech on the health of the economy and the progress of the ongoing monetary and financial reforms.
Cardoso revealed that Nigeria’s current account balance increased by more than 85 percent to $5.28 billion in the second quarter of 2025, up from $2.85 billion in the first quarter, strengthening the external sector and boosting confidence.
“Our foreign exchange reserves, which reached $46.7 billion in mid-November, providing more than 10 months of import coverage, is a clear indication of resilience. Most importantly, our foreign exchange reserves are being rebuilt organically, not through borrowing, but through better market functioning, stronger non-oil exports and strong capital inflows,” he said.
According to the CBN governor, while oil production improved modestly to between 1.45 and 1.52 million barrels per day in 2025, the real progress is coming from the non-oil economy. Non-oil exports grew more than 18 percent year-on-year, supported by reforms and a more flexible, market-driven exchange rate system that has improved competitiveness.
Diaspora remittances also improved, increasing by about 12 percent in 2025 as trust returned to official channels. Cardoso noted that the Bank Non-Resident Verification Number (BVN) framework, introduced earlier this year, would further strengthen entries in 2026 by facilitating the participation of Nigerians abroad.
Cardoso described the transformation of the foreign exchange market as perhaps the strongest sign of renewed confidence in the economy. The CBN, he said, has sustained the unification of multiple foreign exchange windows, cleared the once-crippling multi-billion dollar foreign exchange backlog and tightened transparency rules.
He highlighted the Nigerian Foreign Exchange Code, which sets governance, ethics and transparency standards for licensed traders, along with the launch of the Electronic Foreign Exchange Management System (EFEMS), powered by Bloomberg’s BMatch. These measures, he said, have “reduced opacity and manipulation, restored discipline, and enabled real-time regulatory visibility.”
As a result, the naira now trades within a stable and narrow band, while the spread between official and parallel market rates has narrowed to less than 2 percent, compared to more than 60 percent previously.
Foreign capital inflows have increased sharply, reaching $20.98 billion in the first ten months of 2025, a 70 percent jump from the total inflows recorded in 2024 and a staggering 428 percent increase from the $3.9 billion seen in 2023.
Cardoso also described the reforms in the fixed income market, carried out in collaboration with the Securities and Exchange Commission (SEC) and the National Pension Commission (PENCOM). These efforts aim to deepen liquidity, strengthen transparency and improve the transmission of monetary policy.
He stated that the CBN remains committed to maintaining a flexible exchange rate framework and will soon introduce a revised Foreign Exchange Manual to expand market participation and strengthen documentation and supervision.
“The Central Bank of Nigeria will do everything necessary to protect financial stability which is rewarding us with improved international investor sentiment,” Cardoso said.
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